Business law final

Intellectual property

Property developed through an intellectual

and creative process.

Think Coca-Cola’s recipe,

Google’s search algorithm.

Tangible Property

something physical that you can touch or possess directly, such as a car, laptop, cash, or house.

Intangible rights

non-physical assets or legal rights, such as Patents, Trademarks, copyrights and trade secrets.

Easier to steal intangible rights - through illegally copying software, etc

Trade Secrets

The how the company makes the product.

Product formula (Coca Cola, KFC), Product design, Product data, algorithms, ingredients, and even customer lists.

These do not qualify for patent, trademark or copyright protection.

Trade Secrets: (what protection)

common law rights and state laws protection. Trade Secret Acts and Federal Defend Trade Secrets Act.

Ex: may make employees sign NDA (cant talk about what they do) , Non compete (No use for competition), Non-Solicitation (no talk to employees and customers)

Misappropriation

Stealing a trade secret through unlawful means.

If you sue and win, you can:

– Recover lost profits

– Recover damages

– Obtain an injunction to stop the misappropriation

Reverse Engineering

Lawful means of learning a trade secret

Taking the product and attempting to break down how it is made.

Economic Espionage Act

Improperly spying on someone

Ex: Joining team to get information then attempting to make copy or give to competitors

Patents

Grant of protection for inventors of inventions. Allows exclusive right to sell, use or license for a limited time period.

Machines, processes, designs but NOT scientific principles and abstract concepts unless they are part of the tangible environment.

How to patent something

Must go to US patent and trademark office to make a patent:

Must have a written description of the invention: application must explain enough about the invention so that someone skilled in the art can both make and use the invention. This is called the enablement requirement.

can challenge patent before fully made

Priority for national security

Some patent applications may receive faster review if the invention is important for:

• National defense

• Military technology

• Economic competitiveness

• Strategic industries like AI, semiconductors, or biotechnology

What is needed for a patent

NUN:

Novel: has to be new and not previously invented (ex: first digital first down marker)

Useful: Has to have practical purpose. Cannot be theoretical (Ex: coffee cup Sleeve)

Non-obvious: ex: Removing crust on PBJ

Utility Patents and Design patents

Utility: inventions (valid for 20 years from date of filing of application)

Design: (ornamental/appearance) valid for 14 years after enters public domain

Applies to the person that is the first to file, not the first to invent.

To enforce Patent what if malpractice happens:

must go to US Court of Appeals for Federal Circuit.

Called infringement or unauthorized use

• Damages, royalties, lost profits, injunctions.

AI cannot file for patents

Copyrights

Gives authors of qualifying matter exclusive right to publish, sell, license and distribute the work

Tangible writings that can be physically seen –books, writings, musical compositions, plays, pictures, movies, photographs, sounds, recordings, apps, online media, computer programs

Must be original work of the author

Copyrights pt2

May register with the US copyright office but do not need to in order to get protection. receive statutory instead of Common law.

Federal Law governs not state

How long copyright valid

Individual: Person life + 70 years

Businesses: 95 years from first publication, or 120 years from creation (shorter)

Fair Use Doctrine

Allows limited uses of the work. Quotations, new reports, teaching, incidental use

Copyright infringement

Unauthorized use of product

Sue for damages, impoundment, lost profits, injunctions

Creator on social media owns content but site is able to use how they want

Can AI be copyrighted?

only if sufficient human involvement

No Electronic Theft Act (NET act)

People can face criminal penalties for:

• large-scale digital piracy

• illegal online distribution

• sharing copyrighted works electronically even without making money

Digital Millennium Copyright act (DMCA)

• Prohibits bypassing encryption or digital protections (anti circumvention rules)

• Protects copyrighted digital media

• Allows copyright owners to send DMCA takedown notices to websites/platforms

Trademark

A Trademark is a trade name, symbol, logo, design or device used to identify and distinguish goods of a manufacturer

must be distinct meaning its unique

Service mark

distinguishes a service from competitors.

Registered TM

Nationwide protection for 10 years able to use the symbol

if not registered you get protection within your state under common law

What if someone infringes on trademark

Need to prove it was a mistake on confusion

You will be able to destroy goods made, get profits from damages

Abandonment of trademark

Nonuse for 3 years

Dilution:

Weakening of mark to identify goods

Blurring: Using a famous mark for a product or service in another market

Tarnishment - linking product to an inferior one

Entrepreneur

Formed business by individual

Sole proprietorship

Owner is the actual business

Most common form of business organization

Unlimited personal liability: charge more than you have

creditors can go for personal assets or business

Pros

Easy low cost of formation, you can make all choices

right to receive all profits

easy to sell

cons

No liability shield

Access to capital is limited to personal funds

full legal responsibility for contracts

responsible for its employees

create sole proprietorship

No formalities

No approval for government

Some require within city

can operate under trade name

Taxes of sole

No taxes at business level

personal income tax return

• form 1040

• Schedule C (profits and losses)

General partnership

Right and duties between partners defined by the partnership agreement

Partners personally liable for debts

May use fictitious name

-publish notice

Duration can be fixed or no fixed time

Requirements for general Partnership under RUPA

Voluntary association of two or more persons

Carrying on a business (occupation)

As co-owners; partners must agree to participation

For profit: profit motive, failing to make a profit doesnt disqualify

Evidence of partnership

Prima facie evidence

Receipt of a share of business profits

Compelling evidence

Agreement to share profits and losses

Right to participate in management

To bind a partnership

Need partnership agreement

if over a year must be in writing under statue of frauds

Partners free to determine terms, except illegal terms

If something missing RUPA fills in gaps

Partnership Tax

Partnership doesn’t pay federal income tax

-file information return

Income and losses reported

-flow through taxation

Rights of general partners

right to participate in management

equal vote on partnership matters

Unless agreed on, both receive shares equally in profits and losses

Partners entitled to reimbursement for expenditures on behalf of partnership

Partners who make loans to partnership entitled to repayment

Get return of capital contributions upon termination of partnership

Partners have full information of other partners

Fiduciary duties among partners

Duty of loyalty: Must choose the interest of the partnership (dont self deal, Compete, secret profits, breach of confidentiality, personal use of property)

Duty of Limited care: liable for known violations of law, not liable for partners negligence or honest errors

Duty to inform: partner must inform co-partners of all information they possess.

Duty of obedience: Must adhere to the partnership agreement and decisions made in the business.

Duty to account: Partner cannot sue partnership should bring action for accounting

• review partnership spending and if someone was spending wrongly

Partnership Liability

Very liable

Sue one or more partners from the partnership for ones actions.

Partners can seek indemnification from partner who committed wrongful act

liability of incoming partners

New partner being added to partnership is liable to past debts only to extent of their capital contribution, but after is charged

Dissociation

Dissolution

Dissociation: Partnership wants to swap members: Death, bankruptcy, transfer of interest,

Dissolution: Partnership is being terminated

Winding - Up

Process of liquidating assets of partnership

Debts paid to 1. Creditors, 2. Settlements for partners

Limited Partnerships two types of partners

General partners - invest capital, manage business, personally liable

Limited partners - invest capital, no management, not personally liable

Formation of Limited partnership

Formal process of creation

Public disclosure

filing of certificate of limited partnership is required

Must include L.P. when naming

Limited partnership taxation

Limited partner not liable for losses beyond capital contribution

Pass through entity no federal income taxes

Partnership must keep records at principle office

– Certificate and all amendments

– Full names and addresses of each partner

– Written limited partnership agreements

– All income tax returns

– Three years of financial statements

What does a limited partner do?

Work for company

may promise to pay debt

Consultant or advisor

Vote on new partners

Vote on key decisions

Dissociation and Dissolution of limited partners

Dissociation: Limited partners cannot withdraw before LP terminates as you have capital contributions

Dissolution: could have contract where if general partner withdraws has 90 days to find new person to run the ship

Winding up limited partnership

Certificate of cancellation must be filed in the state

Corporations

Created under state corporation codes

Can sue or be sued in their own names

Enter into and enforce contracts

Act as a separate legal entity

Corporate shares are freely transferable,

Perpetual Existence

Everlasting until shareholders decide it should be terminated

Corporate management

Board of directors make the policy decisions

Directors appoint corporate officers to run day to day operations

Corporation Liability

Shareholders limited liability

For profit vs non profit

For profit: private not own by government, created to generate profit, profits to shareholders in dividends

Non Profit: cannot distribute to shareholders, funneled back into non profit